Singapore shares fuelled by rate-cut optimism; STI climbs 0.4%

DBS closes S$0.23 or 0.6 per cent up at an all-time high of S$38.38

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Tay Peck Gek

Published Thu, Jul 11, 2024 · 05:54 PM

Banks typically see margins compressed in a lower-interest-rate environment, but DBS shares have bucked the trend to close higher on Thursday. PHOTO: BT FILE

FEDERAL Reserve chairman Jerome Powell’s testimony to the United States Congress fuelled a rally across Asia-Pacific bourses on Thursday (Jul 11), lifting the Singapore blue-chip barometer as well.

The central bank of the United States will not wait until inflation has hit the bank’s 2 per cent target before lowering interest rates, Powell told lawmakers the day before, in remarks that unleashed optimism among investors for rate cuts soon.

The Straits Times Index (STI) clocked a 15.13 point or 0.4 per cent rise to 3,475.06 points, with all seven real estate investment trust (Reit) constituents closing higher.

Lower policy interest rates benefit companies and investment structures that are highly leveraged, such as Reits.

Mapletree Logistics Trust led the climb among the STI-component Reits, with a 4.8 per cent or S$0.06 surge to S$1.32.

Dasin Retail Trust , Daiwa House Logistics Trust and Elite UK Reit were the only counters among the several dozens of listed Reits to finish in the red, with their unit prices falling by between 0.9 and 4.2 per cent.

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Banks, however, would see margins compressed in a lower-interest-rate environment; OCBC and UOB shares dipped by S$0.03 or 0.2 per cent and S$0.14 or 0.4 per cent, respectively, to S$15.20 and S$32.96.

Their competitor DBS bucked the downward trend, rising S$0.23 or 0.6 per cent to an all-time high of S$38.38.

Gainers beat decliners 382 to 220 across the broader market, with 1.3 billion securities transacting at S$1.3 billion in total.

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